Attorney: Tommy Leung Sponsor:

Last Known Address/TBOR Change Due Date Of Report To Legislature DEPARTMENT AMENDMENTS ACCEPTED. Amendments reflect suggestions of previous analysis of bill as introduced/amended . AMENDMENTS IMPACT REVENUE. A new revenue estimate is provided. AMENDMENTS DID NOT RESOLVE THE DEPARTMENT'S CONCERNS stated in the previous analysis of bill as introduced/amended .

FURTHER AMENDMENTS NECESSARY.

DEPARTMENT POSITION CHANGED TO .

REMAINDER OF PREVIOUS ANALYSIS OF BILL AS INTRODUCED March 22, 2007, X STILL APPLIES. OTHER – See comments below.

SUMMARY

This bill would make three changes to the Revenue and Taxation Code: • Revise check casher reporting requirements to not apply to incidental cashers, as defined, • Define the term "last known address" for legal notices, and • Change the date that the annual Taxpayers' Bill of Rights Report is due to the Legislature.

The provisions that would define the term “last known address” and would change the due date of the annual Taxpayers' Bill of Rights Report are Franchise Tax Board (FTB) sponsored provisions.

SUMMARY OF AMENDMENTS

The April 25, 2007, amendments would remove the incidental check casher, as defined, from the requirements to report certain transactions. In addition, the amendments would provide an exception to the reporting requirements for payroll and government checks, as defined. The check casher provisions are discussed in this analysis. The remainder of the department’s analysis of the bill as introduced on March 22, 2007, still applies.

Board Position: Legislative Director Date

PURPOSE OF THE BILL

According to committee staff, the purpose of this provision of the bill is to reduce the burden ofreporting for incidental check cashers and remove duplicative reporting requirements related togovernment checks.

EFFECTIVE/OPERATIVE DATE

This bill would be effective January 1, 2008, and be operative for information returns due on orafter that date.

POSITION

Pending.

ANALYSIS

FEDERAL/STATE LAW

Current federal law lacks reporting requirements for check cashers similar to those in place forCalifornia. Federal law requires financial institutions to report each deposit, withdrawal, exchangeof currency, or other payment or transfer that involves a transaction in currency of more than$10,000. Financial institutions are also required to file a suspicious activity report if the institutiondetects or suspects certain activities conducted through the institution involve money laundering,criminal violations, or illegal activities.

Under state law, any check casher engaged in the business of cashing checks that, in the courseof that business cashes, in one or more transactions in a year, an amount totaling over $10,000for the same person, must provide an annual information return to FTB reporting thosetransactions. Failure to file the required return could result in fines or imprisonment.

THIS BILL

This bill would exclude any person identified as a check casher under the Civil Code, whosecheck cashing business is incidental to their principal business, from the information returnreporting requirements. Incidental is defined to mean that not more than 10% of the business'revenues are derived from check cashing activities.

The bill would also exclude from reportable transactions payroll checks and government checks,as defined. Government checks are defined as checks issued by a federal, state, or local entity.Payroll checks are defined as checks subject to withholding under the Unemployment InsuranceCode and subject to certain fee restrictions under the Civil Code.Assembly Bill 1747 (Revenue and Taxation Committee)Amended April 25, 2007Page 3

IMPLEMENTATION CONSIDERATIONS

The department has identified the following implementation concern. Department staff isavailable to work with the author’s office to resolve these and other concerns that may beidentified.

The bill would provide a definition that an incidental check casher is one for whom not more than10% of the revenue of the business is derived from cashing checks, but does not include adefinition for “revenue.” The absence of a definition to clarify this term could lead to disputes withcheck cashers and would complicate the administration of this provision.

TECHNICAL CONSIDERATIONS

It is recommended the following technical changes be made to correct grammatical errors.

Estimated Revenue Impact of AB 1747

2007/08 2008/09 2009/10

<$150,000 loss <$150,000 loss <$150,000 loss

This analysis does not consider the possible changes in employment, personal income, or grossstate product that could result from this bill.Assembly Bill 1747 (Revenue and Taxation Committee)Amended April 25, 2007Page 4

Tax Revenue Estimate

Because taxpayers with incidental check cashing activities are anticipated to represent a smallportion of all check cashers, the revenue impact for this bill is likely to be insignificant.